Can HOA board resign?

I'm on the board of a 36 home HOA, within a larger planned community of 10 other HOA's. My HOA was self-managed for the prior 34 years, but late last year we hired a management company to deal with the accounting and hopefully find honest, reliable lawn, pool and irrigation maintenance. We also had a few homeowners who were substantially behind in their monthly HOA fees (one was 19 months behind) which made it awkward to move ahead with legal issues for non-payment since we know them personally. An HOA management company let them deal with it. The HOA management company does take care of payments, but they are extremely slow in paying bills.

The previous boards didn't increase fees for years, not even to keep up with inflation. Needless to say an ageing community pool and old irrigation system require much maintenance and there simply isn't enough money to cover all needed repairs. We attempted to get a small monthly increase in the fees but the HOA management company we hired to help us has been dragging their feet in sending out the necessary letters and ballots to take a vote for the increase. I don't want to get too bogged down in details so that's the short version.

Most of the homeowners are retired or getting close to retirement. There are two former board members here, both old and in poor health. There are a few rentals with absentee landlords and a few younger families. The problem is, we are down to 3 board members, having just lost one who moved out of state. It's now myself and the board president, and a secretary who keeps minutes of meetings and sends out HOA emails. We are all volunteers, of course.

Prior board members made a gentlemen's agreement to serve 3 year terms. I signed nothing when I volunteered almost 2 years ago. The HOA management company has done very little to help us in terms of good vendors. We hired a landscape company that does the front yards and fixed irrigation. I've been taking care of the pool for the past year because the previous pool guy was unrealizable and unscrupulous. But the pool is in need of extensive and very expensive repairs.

We've asked for volunteers to serve on the board and got no takers. The current president is on his 4th year. I'm 68 and he's 65. I told him I'd stick with it till my 3 years is up, but not after that. He's getting burned out because of all the demands from a handful of angry homeowners and lack of money.

When I first jump in, I was very enthusiastic and spent many hours fixing broken sprinkler heads (to save money) and keeping the pool clean and in compliance (again, to save money). But after almost two years, the complaints and the ever-growing list of maintenance issues has become overwhelming. The president (and personal friend) is pretty burned out too. We are weighing our options now.

What happens if an entire volunteer HOA board resigns?

Individual Directors/Officers may resign at any time.

Ideally, they inform the membership of their intent, ask for volunteers and appoint those willing to the soon vacant position prior to resigning.

If there are no volunteers, the boards last act should be to petition the court for receivership.

Receivership is not the best option as the receiver answers to the court and not the membership.
Assessments will increase to pay the court appointed receiver.
If your amenities need repair or if reserves are low, the receiver can ask the court for special assessments and increases in regular assessments (regardless of the procedure outlined in your governing documents).

The receivers goal is to run the Association until a full board can be elected.
Then, with the courts blessing, the receivership will end.

Another option, if there are no volunteers, is to see if the master association will take on the task.

To add to others' excellent advice:

The length of a board term should be defined in your bylaws. I've never heard of any bylaws that left this open to "agreements" between board members.

I agree with Tim that receivership is a painful necessity for associations that can't elect directors. The good thing is that a few months of it is often enough to convince homeowners to volunteer. If the manager won't send out the necessary letters, then the board needs to do it. And if you do end up in receivership, hopefully the court-appointed receiver will be looking around for a more effective PM - the current one sounds like they've either taken on more clients than they can handle well, or they just don't care.

I hear you about the board being fed up: the burnout is real. As for dealing with demanding neighbors, my favorite trick was thanking them for their suggestions and then giving them the job of researching the idea and writing up a proposal for the board (including how to pay for it). You'd be amazed - or perhaps you wouldn't - at how many of these demands evaporated when the complainer actually had to do something to make it happen. And don't feel bad about doing this. You're not their unpaid servant - and if the person who wants something doesn't care enough about it to work for it, why should anyone else?

It would depends on state laws, but the organization could face going into receivership. If it went before a judge, there is a possibility that a judge might rule rescind the resignation of the last person to resign, forcing that person to stay until a new board is formed.

Patrick

As Lisa said, it is typical that the BOD alone has some method to increase yearly assessments (dues). You need to read your docs closer and/or get some legal advice. Begin there.

"the burnout is real". Yes indeed. I spent 6 years in the army in the 70s and that experience makes one very leery of "volunteering" for anything. Now retired, I thought I'd give back a little to our small community. And I quickly discovered that no good deed goes unpunished. Fact is, there are 3 very vocal homeowners who make up almost all the complaints.

Our attorney refers to homeowners like this as "vocational dissidents". Every community has some, and they will wear you out. They thrive on conflict and controversy, and HOA boards are favorite targets. Social media was made for them, which is one reason why the attorney strongly discouraged their clients from having websites or social media pages where homeowners could post. (The major issue was liability resulting from these posts, in addition to the damage they can do to the community.)

There is a trick to dealing with these folks: you want your interactions with them to be brief, bland, and boring. Communicate in writing, just the facts, no arguing back and forth, no re-visiting past decisions just because they didn't like something. You need to control the interaction, not them. It can take a while, but if you stick to it and fail to give them the emotional payoff they're looking for, they'll ease up. But you do need to stick with it, because they won't change their emotional makeup even though they've settled down - you have to permanently adjust how you communicate with vocational dissidents.

I had a selection of scripts I used - because it's easy to go off message when you feel as though you're being attacked - and I kept all personal interactions cordial and short: "How are you, how about this crazy weather, oh is that the time gotta run."

-- No authority will exist to pay the bills. The insurance bill being paid may be the most important. Vendors can sue the corporation (which does not simply dissolve). Whence a judge may, as part of the process, appoint a receiver. For discussion of receivership happening while a vendor is trying to collect a debt (in Arizona), see https://www.swlaw.com/assets/pdf/publications/2021/08/12/Receiverships%20Arizona.pdf

-- No statute, case law or covenant requires that directors arrange for receivership. Per the bylaws and state law, I think a board may lack the authority to petition a court for receivership.

-- An attorney will be essential to apply for receivership. If the Board thinks it can apply for receivership, it will pursue receivership using funds from owners. Does this HOA have the funds for this?

-- On the other hand, a non-director owner has every right to petition a court for receivership.

-- I think the best approach is to copy a few paragraphs from the net on what receivership means and how much it will cost owners. The board should prepare a letter that includes the latter paragraphs. The letter should state all directors will resign on such-and-such date, at which the risk of receivership becomes very high. Conclude with "all applicants for the board are welcome."

-- An anecdotal report from an Arizona HOA that went through receivership in the last few years, saying it was not that bad:

There was a community in Prescott that went thru court mandated receivership a couple of years ago. This is nothing that anyone wants to go thru voluntarily. In that particular case the board was forced to provide records to a homeowner that would have potentially subjected the board to criminal charges. Rather than do that the entire board resigned. Without a board the management company and the association attorney also resigned. The homeowner sued the association for contempt of court. No one in the community was willing to run for the board under these circumstances. Without a board the association essentially did not exist and all property sales in the community were stopped. The records of the community were dropped off in the old attorneys office and they refused to turn over any of the records requested, since they had to client to represent. The court case was long and i worked extensively to help the homeowners in this community. The association attorney even attempted to slander me and my organization in court and i filed a complaint with the Arizona Bar. (totally useless organization). The court appointed receiver was actually very helpful and brought the community back to a point where the homeowners were once again comfortable with running for the board.

During receivership all homeowner rights are suspended and the community is under the total and exclusive control of the receiver. He can do whatever he feels necessary to get the community back on their feet and the cost is all borne by the homeowners. Including all the court cost of the scum bag attorneys in that case.

In this case the outcome was good the cost is going to be the cost and no-one has any choice in the matter.

If you have an opportunity to avoid receivership that by all means do whatever you can to do that.

See https://hoatruth.com/2021/06/17/receivership/